A Poor Role Model for Voters

The image of the business model, personified in the “corporate citizen” which is fostered by the private sector and aided by their like-minded buddies in the courts, the media and the legislatures throughout our history, have masked over their significant disparities and flaws while demonizing government.  Have they succeeded in deluding the voter?

Who’ll be my role-model
Now that my role-model is
Gone Gone
He ducked back down the alley
With some roly-poly little bat-faced girl
All along along
There were incidents and accidents
There were hints and allegations – Paul Simon, You Can Call Me Al

Whenever I hear a would-be politician use business models as an acceptable way to run government I shudder at the prospect because I haven’t bought in to that false comparison and the alleged efficiency factor that businesses are more capable than their government counterparts.  I’m encouraged in this view by University of Denver political scientist Seth Masket who wrote on his blog:

Businesses exist to turn a profit. They provide goods and services to others only insofar as it is profitable to do so, and they will set prices in a way that ends up prohibiting a significant sector of the population from obtaining those goods and services. And that, of course, is fine, because they’re businesses. Governments, conversely, provide public goods and services — things that we have determined are people’s right to possess. This is inherently an unprofitable enterprise. Apple would not last long if it had to provide every American with an iPad.

I’m also always surprised to hear people tout the efficiency of the private sector. There’s a great deal of inefficiency in the private sector, of course. How many CEOs end up hiring dim, unqualified brothers-in-law or grandkids who are taking time off college? And that’s just not considered a big deal as long as it doesn’t noticeably hurt the bottom line.   SOURCE

Matt Yglesias also supports this thinking, noting that if governments were run like businesses then older workers would be laid off and health insurance benefits for workers and their families would be reduced or eliminated in order to more efficiently turn a profit for shareholders, unlike a state that “is fundamentally an ethical enterprise aimed at promoting human welfare.”   Though Yglesias’ comments refer to the expectations of our founding fathers, in today’s political environment the “ethical enterprise” notion associated with government may raise some eyebrows.

And for those who insist on equating federal and state budgets with household budgets, L.Randall Wray at the Roosevelt Institute will debunk that notion for you.

But there is another reason we need to be concerned about politicians like Mitt Romney who want to run government like a business.  The reason, recently illustrated in an article by data scientist Cathy O’Neil, is that they have no soul and no heart.  In her article entitled How Big Pharma Cooks Data –The Case of Vioxx and Heart Disease we see the type of profit motive-thinking of CEOs and their top executives that literally put more energy into making money for investors than seriously benefitting the public they claim to serve.

You can read the details in Ms. O’Neil’s account for yourself, and I encourage you to do so, but the bottom line here is that deceptive practices and out-right lies were perpetrated at Merck to conceal the flaws with Vioxx, a big seller for the company, in order to boost their bottom line to the fatal detriment of many of Merck’s customers.

Vioxx was a non-steroidal, anti-inflammatory drug aimed at alleviating acute or chronic conditions where pain and inflammation are present from such things as rheumatoid arthritis, Osteoarthritis and metastatic bone pain, to name just a few.  Though there are over-the-counter medications like Aleve, Ibuprofin and even aspirin that work equally well (and are much lower in costs), Vioxx was not supposed to have the unfortunate side effects of gastro-intestinal problems that the over-the-counter aids were diagnosed to have.

What it turns out that Vioxx did contribute to however were cardiac, vascular and thoracic events (CVT) that led to death for many users.  Merck, who rushed their product through the clinical trials required by the FDA in record time, was aware before it went on the market that there were problems associated with CVT issues but went out of their way to conceal this.  O’Neil also addresses the FDA’s failure to adequately oversee the process that allowed Vioxx to enter and stay on the market for 5 years.

In a practice familiar to many Americans who saw the Ford Pinto back in the 1960‘s and 70‘s use a cost benefit/analysis method to determine it was cheaper to keep their flawed design than it was to pay out lawsuit awards to the families of victims who were killed by this design flaw, Merck apparently took the same approach and weighed profits over punitive fees.  O’Neil’s article points out that even though Merck lost “one of the largest [lawsuits] resulting in a $5 billion settlement … [it] was essentially a victory for Merck, considering they made a profit of $10 billion on the drug while it was being sold.”

It is this kind of practice that gives corporations its bad reputation.  It is also this kind of practice that gives greater credence for some kind of oversight by state and federal governments to protect a naive, trusting public.  However, it must be an oversight that is not run by crony capitalists in government who are later hired by the industries they regulated and where many later re-enter government to once again effect policy and legislation that is beneficial to their former employers.  This is what is known as Washington’s K Street revolving door. 

I believe free markets are basically a sound approach to addressing our economic needs.  But like any system in the wrong hands there are actions that can be taken merely for the sake of personal gain while having serious consequences for innocent people.  It’s the nature of the business beast as political scientist Masket points out since “businesses exist to turn a profit.”

Let’s hope that enough voters get wise to the specious arguments made by politicians who demonize government while ignoring the deadly flaws in business practices and their government connections that seem to becoming more the rule than the exception.

“Aristotle would say America no longer serves the public good, its government being held hostage by an oligarchy on the verge of becoming a tyranny, by far the worst form of organization or constitution or government.”  – Evaggelos Vallianatos, from his essay, Delusions of the Corporate State


Everything You Need to Know About Wall Street, in One Brief Tale (Matt Taibbi, Common Dreams blog)

Is Modern Capitalism Sustainable?

9 responses to “A Poor Role Model for Voters

  1. What a fantastic post. I’m definitely copying this one and bookmarking it. We need both business and government and the two should not become synonymous. We’d be much worse off it government ran itself as a business. I’ve worked more often in the private sector than in the public sector, where I am now, and I saw plenty of inefficiencies and abuses in the private sector. Frankly, had the FDA not allowed business to intervene, cigarettes would have been made illegal and we wouldn’t be experiencing the huge costs to health and productivity now.

    • “We’d be much worse off it government ran itself as a business.”

      So true Jean. We don’t get to see the flaws and failures of private enterprises as we do in the public sector because they don’t have to answer to the public in ways that governments do. Many businesses do good work and make a profit while being a service to consumers. But the bottom line is that once their ability to turn a profit turns south some within the hierarchy are devising ways to conceal it or make it work in their favor while investors and tax payers wound up paying for their malfeasance.

  2. Way to slay the sacred cow! Well said in every way. We do seem to accept that govt should be run like a business without even thinking it through. The powers that be are very good at running mantras that cause us to not think about what we are espousing. You point out the inadequacies quite well. And I so agree, business have no heart or soul and they are continually proving it, whether it be by hiding flawed goods or by offering up our very environment in exchange for a buck. Bravo.

    • Thanks Sherry. I read somewhere that much energy and financial resources have been put into efforts to remove the stain of wealthy corporate interests following the scandals of the Gilded Age. Putting lipstick on this pig has had some effect on an otherwise poorly informed public over the years.

    • Thanks Scott. It helps to spread the simple message of the OWS crowd that crony capitalism is not only capitalism at its worse but it violates the principles of the long admired Protestant work ethic.

  3. The problem is that the federal government cannot be run like a business because of economics…..and to say the a governor would be a better leader is erroneous also a state government is not a federal government….a lot of the balanced state budgets are that way through creative accounting not because it is actually balanced…….just as civil laws are needed to be sure that society is safe and secure so should there be business regulations that provide the same service…..great post Larry….

  4. O’Neil’s article points out that even though Merck lost “one of the largest [lawsuits] resulting in a $5 billion settlement … [it] was essentially a victory for Merck, considering they made a profit of $10 billion on the drug while it was being sold.”
    Ugh!! That is some sick crap right there. Who cares that people died – they just made $5 billion. 😡

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